The Supreme Court surprised market analysts and the American public by passing the core item in President Obama’s Affordable Care Act. By a vote of 5-4, the country’s highest court approved the controversial individual mandate that requires persons not covered through an employment or governmental health care program to maintain minimal but critical health insurance coverage or pay a penalty to the IRS. This provision is effective in 2014. The amount of the penalty will be one percent of annual income. Exceptions to the mandate include religious beliefs and/or extreme financial hardship. In addition to the individual mandate, the Affordable Care Act a/k/a Obamacare provides consumer friendly and stable pricing by health insurance carriers.

Roberts

The deciding vote was cast by Chief Justice John Roberts, a George Bush appointee. The four liberal justices were approved the individual mandate. There were no early indications that Justice Roberts would support the law. In fact, in extremely tempestuous arguments by both sides, the judges seemed to be swaying to overturning the individual mandate. The decision was a stunning upset for the twenty-six states that had filed suits about the requirement.

The legislation was first introduced to the House as the Service Members Only Tax Act on September 17, 2009. The bill was passed by the House on October 8, 2009. The Senate amended the bill and passed it as the Patient Protection and Affordable Care Ac on December 24, 2009. The House passed the amended bill on March 21, 2010. The 1,000-page bill was signed into law by President Obama on March 23, 2010.

The Supreme Court’s decision struck down a provision that would require states to expand health programs for the poor. The big winners in this decision are the 30 million Americans without health insurance including public insurance like Medicaid and Medicare. The legislation is projected to provide health coverage to about 6 percent of the population but will also expand both Medicaid and Medicare coverage.

Justice Roberts deemed the Affordable Care Act a tax stating that individuals who do not comply with the mandate will be paying an annual tax to the IRS. As such, The Supreme Court has no jurisdiction over the legislation. Some portions of the law have already been implemented while other portions of the law will be implemented up until 2020. The individual mandate will be in full force by 2014. The long-term goal of Obamacare calls for a thorough and complete analysis and corrections to what is now a $2.6 trillion industry.

Upon news of the decision, Health insurance equities turned up sharply. Analysts said this is the verdict the market wanted. Investors indicate that at least there was some definition to the law. Republican Speaker of the House, John Boehner, swiftly responded to the decision saying that it was now critically important for Congress to overturn the law, a difficult undertaking given the composition of the Senate.

Women are also big winners with this law. Obamacare prevents health insurance carriers from charging higher rates based on gender. The law also permits children 26 years old and younger to stay on the parental policy. Additionally, persons of the same age, regardless of medical history, are entitles to the flat rates for person of the same age with excellent medical histories. The premium rates for women exceed the rates for men by approximately $1 billion per year. This policy will be implemented in 2014.

Other women-specific amendments include the requirement for maternity coverage. Nursing mothers at facilities with 50 or more employees will be allowed mandated work breaks and workplaces must provide areas where mothers can breast feed.

Several businesses researched the expected premium increases for private health insurance providers. The Rand Corporation reported premium would increase by 9.3 percent without the individual mandate. The Urban Institute indicated a 10 percent increase while the CBO projected increases by a whopping 15 – 27 percent.

The law sets in motion a requirement that states establish insurance exchanges where candidates can purchase health insurance in a competitive marketplace. The funding from this initiative comes from various taxes and offsets and from new income caused by increased Medicare taxes on high income tax filers. A 10 percent federal sales tax will be imposed upon pharmaceuticals and diagnostic equipment. An annual fee of $60 billion will be imposed on health insurance carriers and a 40 percent excise tax on policies in excess of $10,200 singles plans and $27,500 family plans. Another tax will charge an excise tax on manufacturers and importers of brand prescriptions. There are several more taxes included in the funding proposal.

Time will tell how much tweaking goes into the law after this decision. Despite Republican objections, The Affordable Care Act is law and will be here to stay.